Northern Rock 'bad bank' to close Newcastle office

Northern Rock's "bad bank" is to sever its ties with the failed
lender's home city of Newcastle and relocate all its staff to sites in
nearby towns.

Workers union Unite described UKAR's action as "devastating" particularly after Virgin Money last month committed itself to Newcastle after buying the "good bank" part of Northern Rock from the Government for about £1bn.

UK Asset Resolution (UKAR), the company managing the Government's holdings of the toxic assets of Northern Rock and Bradford & Bingley, said it would be shutting down its Gosforth site and moving the approximately 700 staff to operations in Sunderland and Bingley.

The majority of the workers will be offered new jobs at the two alternative sites, however UKAR admitted some staff were likely to lose their jobs as a result of the move.

Richard Banks, chief executive of UKAR, said the exit from Newcastle was a consequence of a lower workload in the future as the organisation continues to run down the mortgage portfolios of the defunct lenders.

"By the end of 2013 we expect the number of mortgages to have reduced by 25pc since UKAR was established. As a consequence, we will need fewer people and it will no longer be cost effective to run the business from three sites. Our duty is to deliver value for money for our owner, the UK taxpayer," said Mr Banks.

"The loss of some jobs is regrettable but we will work hard with colleagues and the union to relocate people where possible and offer support to those colleagues affected."

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Workers union Unite described UKAR's action as "devastating" particularly after Virgin Money last month committed itself to Newcastle after buying the "good bank" part of Northern Rock from the Government for about £1bn.

"This much-needed boost has been short-lived. There is a need for urgent action to support the financial services sector of the region," said David Fleming, national officer of Unite.

UKAR employs about 2,400 staff and shutting down its Gosforth office removes the organisation's last link with Northern Rock's home city where, in its heyday, it was one of the biggest employers.

Nearly all of Britain's major banks are in the process of making staff redundant and closing offices around the country. On Monday, HSBC said it would be cutting more than 300 staff from its UK commercial banking business as part of its plan to cull 30,000 jobs over the next three years.

Last week, Royal Bank of Scotland, which is 83pc owned by the taxpayer, said it would be closing a customer support facility in Bristol with the loss of 440 jobs.

Lloyds Banking Group has made the largest layoffs and this year said it would cut staff numbers by 15,000, on top of the approximately 25,000 jobs it has already shed.

The cuts come as banks' funding costs have risen and managers look for ways to reduce costs.